Brent crude futures were down 89 cents, or 1.12%, at $78.66 a barrel, and US West Texas Intermediate ​fell 98 cents, or 1.28%, to $75.81 a barrel.

The benchmarks resumed their decline, ​reversing gains made on Wednesday after US President Donald Trump said ⁠he could resume his bombing campaign if Iran’s leaders “don’t behave”.

“The sell-off extended as ​energy markets continued to aggressively price in a faster-than-expected return of Iranian barrels ​following the recent US-Iran memorandum of understanding,” IG market analyst Tony Sycamore said in a note.

The 14-point memorandum begins a 60-day negotiation period during which Iran will allow toll-free passage through the ​Strait of Hormuz, a key oil and gas shipping lane.

The deal ​calls for traffic through the strait to be restored to its full capacity within 30 days.

The ‌preliminary ⁠accord defers many of the more difficult issues, such as Iran’s nuclear program.

Also, it requires the US and its partners to come up with a $300 billion plan to finance Iran’s recovery.

If the agreement is successfully implemented and the Strait ​reopened, this year’s ​supply crisis could ⁠turn into a significant supply glut in 2027, the IEA cautioned on Wednesday, forecasting in its monthly market report that supply ​will outstrip demand by 5.05 million barrels per day next ​year as ⁠Middle East oil returns to the market.

The US Federal Reserve is also increasingly weighing whether it will need to raise interest rates later this year to rein in ⁠inflation, which ​could slow economic growth and suppress oil demand.

Nine of 19 Fed policymakers now think a rate hike will be needed, Wednesday projections showed, a departure from three months ago, when none of them held that view.